Sir Menzies Campbell yesterday staked his party's future on its complex and radical new tax package in an attempt to see off the Conservative threat.

He repeatedly attacked the Tories as he closed his first conference as Liberal Democrat leader, telling members that Britain needed "a party of substance, not of spin".

"Taxation is at the heart of good government. And if a political party cannot tell you how it will tax, then it does not deserve a single vote," he told party members.

"Mr Brown taxes by stealth ... All [David Cameron] says is that he will 'share the proceeds of growth'. That's a slogan, not a policy."

Sir Menzies, who this week persuaded his party to drop its commitment to raising taxes, stressed: "We will not raise the overall level of taxation but we will reform the tax system so that it is fairer, simpler and greener ... We will reward ambition and aspiration - not penalise effort."

The Liberal Democrats face the prospect of losing seats to the resurgent Tory party at the next election and are determined to stress that they are the party that will take action on the environment, not just talk about it.

They also hope to push their tax-cutting message - 28 million workers will benefit, they claim - and prove that they are fairer than the Conservatives. The plans are more redistributive than their previous policy and mark a shift from income to green and wealth levies.

But critics say they are harder to explain than the scrapped 50p rate for high earners. They argue that promising to cut taxes while raising those for the wealthy is confusing, and point out that the rightwing press has focused on the higher bill for the top 10% of taxpayers.

"Those who can afford to make a greater contribution should do so," Sir Menzies insisted. "Yes, it means taxing aviation properly. Yes, it means fuel duty going up with inflation. And yes, it means paying more for the cars that pollute the most. If we are serious about the environment, only action will suffice."

Officials were buoyant after Sir Menzies gave one of his strongest performances since becoming leader. He received a five-minute standing ovation, albeit thanks to well-managed staging, bringing MPs up on to the stage for their share of applause.

"A real improvement - it was what I've been waiting for," said one frontbencher, while party stalwart Lady Williams told the BBC that the week had "hugely strengthened Ming Campbell's position".

In a swipe at the Conservatives, Sir Menzies told activists: "Political parties should not be glorified advertising agencies."

He called on Mr Cameron, who has distanced his party from its Thatcherite past by criticising its stance on apartheid and the poll tax in Scotland, to apologise for his own actions. He urged him to say sorry for backing military action in Iraq and "for the last Tory manifesto, which you wrote - one of the most reactionary, unpleasant, rightwing manifestos of modern times".

But he also accused Labour of squandering its opportunity to change Britain, saying that the gap between rich and poor was wider than under Margaret Thatcher, while higher taxes had not been matched by improvements in public services.

Playing to the party's strengths, he attacked the prime minister's foreign policy as "neither ethical nor effective" and reiterated his position on the crisis in Lebanon, despite criticism from the Israeli embassy, which has boycotted this year's conference. He argued that Hizbullah's actions had been an outrage, but Israel's disproportionate response had only strengthened it.

Sir Menzies added: "There will be no peace in the Middle East while the Palestinians are subject to daily humiliation."

He also pledged to uphold civil liberties, arguing that Labour's attempts to fight terrorism had proved counterproductive.

"Security is not being gained, it is being lost. Terrorism is not being defeated, it is being invigorated," he argued.

He made no reference to the travails of the last year, which include Charles Kennedy's ousting as leader following his admission of alcoholism and a series of personal scandals, but urged the party to "relish the challenges ahead".

Sir Menzies played up the party's prospects in the Holyrood elections next May, claiming the party's Scottish leader Nicol Stephen could even become first minister. He argued that the party had begun the transition to government, thanks to its strength in Scotland and at council level and hinted at the prospect of a hung parliament in Westminster.

"I have been given the opportunity to lead our party from opposition to government," he said.